How to salvage 403b account

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Sandy2
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How to salvage 403b account

Post by Sandy2 » Wed Dec 10, 2008 11:50 pm

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Laura
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Market

Post by Laura » Thu Dec 11, 2008 6:54 am

sandy,

I disagree that set it and forget it has gone away and I also don't think that having large chunks of money in an index is a bad idea. All asset classes have done poorly this year but they market in general has been terrible. There is no way to avoid losses. The return in your portfolio is based on your asset allocation and if you are concerned with the level of your losses then you picked an asset allocation that is too aggressive.

Based on your comments about experimenting with different asset classes it appears you don't have an investment plan. That is step one. Please take a look at Investment Planning and Asking Portfolio Questions. I also encourage you to read some of the books mentioned there.

You have overlap in your current 403b. Total market index is the same thing as equity index + extended market index. You are also not diversified properly internationally and were just speculating on markets like China and Latin America that were "hot". Past performance tells you nothing about future performance and you got burned.

You need to look at all of your investments together as one unified portfolio. Take the time to do some reading, develop and investment plan that has an asset allocation that you can live with if the market continues down, then post all the information about your portfolio here. We can give you comprehensive comments and suggestions at that time.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

Sandy2
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Post by Sandy2 » Thu Dec 11, 2008 8:26 am

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elgob.bogle
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Post by elgob.bogle » Thu Dec 11, 2008 8:54 am

Sandy 2:

It sounds like you have a 403(b) account similar to the one my wife has with Fidelity. I believe that you have the correct ratio of large cap:mid cap-small cap. Most gurus recommend 20%-25% in this situation and you have 23% FSEMX vs 77% FUSEX, if I understand you correctly. For her bond fund, she is purchasing Fidelity's FBIDX (Total Bond market) and we are striving for an overall AA of "age-10" as our percentage of bonds. We are buying bonds with new money from our paychecks.

If you plan on diversifying into international equities, now might be a good time to adjust your asset allocation. Fido's Spartan International (FSIIX) is worth considering. This fund is down slightly more percentage-wise than both FUSEX and FSEMX, so you could sell some of each to get to your desired Asset Allocation. Many folks recommend 20%-30% or more international. The only problem with FSIIX is that it does not contain Emerging Markets. We resolved this issue by purchasing Vanguard Emerging Markets Index (VEIEX) in our IRA accounts s at an overall FSIIX:VEIEX ratio of 5:1. However, this likely under-represents the relative capitalization of emerging markets compared to that of all international equities.

elgob

Sandy2
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Post by Sandy2 » Fri Dec 12, 2008 9:45 am

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elgob.bogle
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Post by elgob.bogle » Fri Dec 12, 2008 1:59 pm

Sandy 2:

It would be much easier for the experts to respond, and you would get better information, if you would complete and post your financial data in Laura's format as presented in the Sitcky "Asking Portfolio Questions" found at the top of the list of entries in this forum. Doing so will make your situation much easier to evaluate, and will enable you to analyze your personal situation from a professional perspective

elgob

Sandy2
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Post by Sandy2 » Fri Dec 12, 2008 2:23 pm

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Tramper Al
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Post by Tramper Al » Fri Dec 12, 2008 2:57 pm

Hi Sandy,

I am a fan of Fidelity and my wife has her 403b there. For the most part, the only Fidelity funds that you want to own begin with "Spartan". All equity areas save for EM can be broadly covered there with this general rule. There should nothing wrong with mentioning specific countries, but it does seem to open you up to BRIC-type marketing criticism around here.

Unlike others, I will not disparage an equity interest in distant exotic lands like China or Latin America as speculation or foolishness. It is just that there are cheaper, passive vehicles to get that exposure.

Generally, you want to spell out and commit to your AA. Most people would combine portfolios with spouse for AA purposes, even if you continue to consider these his and hers rather than theirs. Respondents above are asking for the big picture, as necessary to give you big picture advice.

AA aside, house cleaning would typically involve getting rid of all individual stocks and actively-managed expensive funds (replace with stock index MF/ETF), and optimally locating everything both for tax purposes and based on what is available where. You asked about a temporary international stock home for the 403b, and Spartan International Stock Index is excellent. 90 days minimum, though.

You should try to get away from specific goals for specific accounts. The money doesn't really know where it is, after all. Big picture, whole portfolio, that sort of thing.

kdmusic
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Post by kdmusic » Fri Dec 12, 2008 4:08 pm

As an exercise, you can think about your portfolio alone. But in real life, its best to think about all of your investments at once. So, sadly, you have to put together even more information, including your wife's information, so that people can get a sense of your asset allocation desires and realities etc. The "stickies" on the Help wPI page tell you the necessary format.

But if you give complete information, you'll get better advice here than anywhere else on the planet.


It's been a tough year. I put in about as much as I lost.

Keith

retiredjg
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Post by retiredjg » Fri Dec 12, 2008 4:45 pm

Sandy2 wrote:I honestly thought I included all the relevant info and didn't want to clutter the post with unnecessary details.
Sandy2, welcome to the forum!

I'm sure everyone appreciates that you tried to make it easier, but what you consider "unnecessary details" is just what is needed to understand your situation. There is a format that makes it easier for all of us to understand your financial picture and therefore to help you out. Please go back to Laura's post and use the format in the link titled "Asking Portfolio Questions". That way, you will actually get informed advice.

Also, unless there is a specific reason to keep your husband's money separate, you should consider all of the accounts (his and yours) as one for planning purposes. That way, his accounts can fill in the weaknesses in yours and vice versa.

Even if you and your husband do keep your account planning separate, no one here can give you worthwhile advice on your 403b without knowing the rest of your situation. A retirement account does not exist in a vacuum. It is part of the rest of your financial picture. How worthwhile is advice about just part of your total picture?

Also consider that what you own is only part of the picture. It's location - taxable, 401(k), etc. - is also part of the picture as far as taxes go. Don't you want to know if your taxable accounts are tax-efficient or if you are wasting money paying extra taxes?

Several people here have all said the same thing and it does not seem to be getting through. Please go back and read the posts again. It is possible you are not understanding because it is not what you expected to hear. Believe me, people here are wanting to help you, but just don't have the information needed to give you what you are asking for.

Sandy2
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Joined: Wed Dec 10, 2008 12:38 pm

Post by Sandy2 » Fri Dec 12, 2008 4:47 pm

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Roverdog
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Post by Roverdog » Fri Dec 12, 2008 5:08 pm

Sandy,

Just post percentages, not absolute dollar amounts; that way no one is going to know your complete financial details. :)

Consider what retiredjg and others have said about the complete picture -- for example, for most people it's generally better to keep your bonds in your tax-sheltered plans and your equity in taxable, when you fill your tax sheltered accounts.

Bob

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